LPEM UI: Increased Fuel Prices Will Have A Full Impact On The Community In A Few Weeks

Illustration (Photo: Doc. Antara)

JAKARTA - The University of Indonesia's Institute for Economic and Community Research (LPEM UI) emphasized that the government's move to increase the price of subsidized fuel oil (BBM) at the end of last week is believed to have a distinct impact on the community.

LPEM UI researcher Chairal Nuryakin and his two colleagues said that the massive influence would not be felt quickly and would require regular propagation.

"The full impact of the increase in fuel prices will be felt by the community in the future, where the price increase mechanism will last for several weeks until it is finally fully felt," he said in a recent report, Tuesday, September 6.

According to Chaikal, the increase in fuel prices announced at the middle of September 3, 2022 made the price of pertalite increase to Rp. 10,000 per liter, from the previous Rp. 7,650 per liter.

Meanwhile, the price of Pertamax again increased to Rp14,500 per liter from initially Rp12,500 per liter. Furthermore, the price of the subsidized diesel which was originally at Rp5,150 per liter increased to Rp5,800 per liter.

This occurs when the world crude oil price declines to around 80-90 billion US dollars per barrel, starting to lower pressure on energy prices. On the oil price.com page, WTI Crude crude oil was recorded at 89.55 US dollars per barrel on August 31, 2022. Meanwhile, Brent Crude was recorded at $95 per barrel, he said.

Chaikal added, due to this condition, the potential for a spike in inflation is certain to occur even though the government is still trying to control it by cooperating with local governments. "By looking at the pattern and increase in fuel prices set at the beginning of September, we estimate that the annual inflation rate (year on year/yoy) will still be above the inflation target range," he stressed.

As previously reported by VOI, the latest inflation record in August 2022 was 4.69 percent yoy. This record is lower when compared to July 2022 which was 4.94 percent. Meanwhile, the government's target in the 2022 State Budget Law for the whole year is at the level of 3 percent plus minus 1 percent.